Maximizing Aviation’s Contributions to Korea’s Economy

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Seoul – The International Air Transport Association (IATA) has called on the Republic of Korea (Korea) to continue to build on the success of the Korean aviation industry and to further strengthen its competitive advantage.

“Korea has created a strong framework for the success of its air transport industry. Aviation supports KRW 8.3 trillion of economic activity in Korea—equal to 0.8% of GDP — and employs some 140,000 people. If we add in the impact of aviation-related tourism, the numbers rise to KRW 23.1 trillion—that’s 2.2% of GDP—and some 488,000 jobs or 2.2% of the workforce,” said Tony Tyler, IATA’s Director General and CEO.

Today Korea is the world’s 15th largest economy and is the seventh country to join the 20-50 club— with average per capita income exceeding $20,000 and having a population of 50 million. “Aviation enables business. These achievements would not have happened without connectivity to world markets,” said Tyler.

“Efficient connectivity does not just happen. It is the result of the interactions of a complex value chain of airlines, airports, air navigation service providers, agents, freight forwarders, manufacturers and so on. And their activities are deeply impacted by government policy initiatives. If everyone is focused on creating a competitive environment for the aviation industry, the economy grows stronger together. And that is good news for everybody,” said Tyler.

IATA is the global association for some 240 member airlines. Together they comprise 84% of world traffic. Both Asiana and Korean Air are members of IATA.

Tyler identified infrastructure and global standards as areas for Korea to focus.

Infrastructure: “Incheon airport is consistently profitable and enjoys a great reputation with respect to the quality of the infrastructure and service that it provides. The continuous challenge is to make Incheon even better,” said Tyler. In 2007 the airport agreed to a 10% reduction in landing charges from 2008 to 2010. Tyler suggested that a similar reduction would enhance Incheon’s competitiveness even more.

“Whether it be decisions on charges, construction or airport privatization, it is critical that Korea’s competitiveness be the guiding factor. You have created a great competitive advantage with the excellent facilities at Incheon which are competitively priced. Don’t lose that advantage,” said Tyler.

Global Standards: Tyler highlighted the need for Korea’s aviation industry to continue to innovate based on global standards. He recognized Korean Air’s strong support for the introduction of e-air waybills into the Korean market as part of the e-freight initiative. E-freight improves efficiency in the air freight sector by removing paper documents.

Incheon is also playing a key role in using global standard technology to smooth passenger processes with self-service options for check-in, baggage tagging, travel-document checks, boarding, flight re-booking and baggage tracing as part of IATA’s Fast Travel program. “Incheon’s use of biometrics is among the most advanced in the world. To keep that leading edge we look forward to working with Incheon and other key stakeholders in our Checkpoint of the Future (CoF),” said Tyler. CoF uses technology and intelligence to remove the hassle of security while making the process even more effective.

Environment

The global air transport industry is committed to three sequential goals to manage its 2% share of global manmade carbon emissions. These are:

To improve fuel efficiency 1.5% annually to 2020

To cap net emissions from 2020 with carbon-neutral growth

To cut net emissions in half by 2050 compared with 2005 levels

To achieve these ambitious goals the industry is pursuing a four-pillar strategy based on more technology investments, efficient infrastructure and better operations. As part of this strategy, the global air transport industry is seeking a globally coordinated approach through the International Civil Aviation Organization (ICAO), including for market based measures. Tyler thanked Korea for its strong support of this approach.

Korea’s support is particularly important in light of Europe including international aviation in its unilateral and extra-territorial Emissions Trading Scheme (ETS) with airlines being required to submit their permits to Europe in April 2013. Under this scheme Korean carriers would need to purchase carbon permits from Europe to cover emissions over the entire length of flights to and from Europe, including emissions over Korea, China, Russia, Mongolia and any other state that is on the flight path outside of Europe.

Korea is part of a group of some 25+ states which have met in Delhi, Moscow and Washington to make clear their opposition to the EU ETS. “Nobody wants a trade war. Convincing Europe to create the space for success in the ICAO discussions by somehow lifting the immediate threat of its unilateral actions is a top priority,” said Tyler.